What is the issue?
The ironical condition of increasing pulses production and decreasing prices is calling for governmental intervention to make farming remunerative.
What is the concern?
- Amidst fall in pulses production in last few years, a number of market support measures were taken to enhance productivity.
- Coupled with these, a good monsoon in 2016-17 in much of the country led to a good harvest.
- Resultantly, there was an increased production in pulses.
- However, the increased output led to the fall in pulse prices.
- This ultimately resulted in the steep fall in nominal income of the farming sector.
What is the cause?
- Policies have attempted to address the challenge of achieving the twin goals of raising food production and ensuring a minimum price impact.
- This is done through a variety of price support, procurement and public distribution policies.
- But, weak price support mechanisms are failing to balance between the production output and the resulting prices.
- Large scale procurements at times reduce supplies in the market and impact market prices for all the farmers.
What could possibly be done?
- Procurement - The procurement policy could be fine-tuned to the market conditions so as to stop procurements if market prices touch the MSP.
- A procurement system for absorbing ‘excess production’ from the market, departing from the ‘open-ended’ procurement approach has to be designed.
- The objective should be to stabilise prices when prices fall below a certain level, on account of increased production.
- It is essential to complement the system by a good marketing infrastructure for making it accessible to all farmers.
- Also, the procurement system has to be supplemented by an efficient distribution system for it to be effective.
- Alternative scheme - An alternative Price Deficiency Support Scheme is where farmers are paid the difference between market price and the MSP.
- This does not envisage procurement by the government but only payment in cash to the farmers.
- Thus, procurement-effected price fluctuations in the market can significantly be reduced.
Source: BusinessLine
